Take a step back from Generative AI, by Jerry Trites

Interested in adopting ChatGPT or generative AI for your business? Take a step back and look at their Large Language Model (LLM) origins. An LLM is a neuro-network using an algorithm that “processes natural language inputs and predicts the next word based on what it’s already seen. It goes on to predict the next word, and the next word, and so on until its answer is complete.”

ChatGPT is based on the GPT LLM, but there are others. “Along with OpenAI’s GPT-3 and 4 LLM, popular LLMs include open models such as Google’s LaMDA and PaLM LLM (the basis for Bard), Hugging Face’s BLOOM and XLM-RoBERTaNvidia’s NeMO LLMXLNetCo:here, and GLM-130B.”

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Auditors' Responsibility for Fraud - AASB Exposure Draft, by Gerald Trites

The IAASB has released on exposure draft on Auditor Responsibilities for Fraud in auditing financial statements, with comments due by June 5. In response, the AASB has released a similar exposure draft proposing the adoption of the IAASB proposals. Comments are due on the AASB ED by May 6.

The issue of auditor responsibiity for fraud has been an issue in the profession for a hundred years or more. Several legal cases  took place in the early 20th century searching for an answer, and like the Kingston Cotton Mill case, offering one. However, now there is no easy yes/no answer to the question. Business systems and business itself have grown immensely more complex, and still, of course, changing quickly.

It's clear that there is a responsibiity under existing standards in particular to follow the standards that pertain to fraud, such as responsibility to discuss the possibility of fraud with the audit team and the client, to evaluate the contol sysems the client has in place to mitigate fraud, and to ask the necessary questons and carefully evaluate the responses with professional scepticism. it's this risk assessment that is often the sticking point. It's difficult and rendered even more difficult when management lies or misleads.

AI will be helpful when the tools mature. Already there are GenAI tools available to help with Risk Management, But change is going to move on unabated and new challenges will arise with the change. So there's a pretty good chance we (or our succcessors) will be discussing the auditor responsibility question in another hundred years. In the meantime, it is good to respond to the ED and provide your input. Relevant links can be found in the latest FRAS Update, which is available here.



Will the Canadian AIDA be a tragedy?

By Gerald Trites

Until recent times, AIDA represented the popular opera written by Verdi in 1871, a tragedy in which love is contested against duty and neither wins. In Canada, AIDA now refers to the proposed legislative framework, the Artificial Intelligence and Data Act.

The proposals come at a time when AI systems are developing at breakneck speed and creating both anticipation about the power of new applications and concern about how they might be harmful to people. The situation has left many Canadians conflicted. It’s important to Canada in part because there is a strong AI development industry in Canada, which will become more important as new capabilities emerge and new applications are developed. At the same time, new AI apps are being developed for health care, creative arts and other important activities in society, for which the concerns are very legitimate.

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Generative AI in 2024

With the beginning of a new year, it’s an occasion to think about what will be the big trends of the new year. The first thing that will pop to the minds of many is artificial intelligence, particularly Generative AI. It’s been just over a year since ChatGPT made its presence known to the public, prompting a wave of speculation, hype and true activity.

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CPA Founding Partner

Chartered Professional Accountants of Canada (CPA Canada), one of the largest national accounting organizations in the world, has chosen to become a founding partner of ThinkTwenty20.